Wellness becomes a tricky dance once you want to base incentives on an actual health outcome—like reduced blood pressure or cholesterol. Fortunately, DOL offers a checklist to help you determine whether your program is in compliance.
HIPAA’s nondiscrimination provisions generally prohibit a group health plan or group health insurance issuer from denying an individual eligibility for benefits based on a health factor and from charging an individual a higher premium than a similarly situated individual based on a health factor.
What’s a health factor? Health factors include:
- health status
- medical condition (including both physical and mental illnesses)
- claims experience
- receipt of health care
- medical history
- genetic information
- evidence of insurability (including conditions arising out of acts of domestic violence, participation in activities such as motorcycling, snowmobiling, all-terrain vehicle riding, horseback riding, skiing, and other similar activities), and
- disability
An exception provides that plans may vary benefits (including cost-sharing mechanisms) and premiums or contributions based on whether an individual has met the standards of a wellness program that complies with paragraph (f) of the regulations. (We’ll get to paragraph (f) in tomorrow’s Advisor)
DOL’s Wellness Program Checklist
A. Do you have a wellness program? [ ] Yes [ ]No
Wellness programs that exist to promote health and prevent disease are not always labeled “wellness programs.” Common names include: disease management programs, smoking cessation programs, and case management programs.
Examples include: a program that reduces individual’s cost-sharing for complying with a preventive care plan; a diagnostic testing program for health problems; and rewards for attending educational classes, following healthy lifestyle recommendations, or meeting certain biometric targets (such as weight, cholesterol, nicotine use, or blood pressure targets).
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B. Is the wellness program part of a group health plan? [ ] Yes [ ]No
The wellness program is only subject to Part 7 of ERISA if it is part of a group health plan. If the employer operates the wellness program as an employment policy separate from the group health plan, the program may be covered by other laws, but it is not subject to the group health plan rules discussed here.
Example: An employer institutes a policy that any employee who smokes will be fired. Here, the plan is not acting, so the wellness program rules do not apply.
C. Does the program discriminate based on a health factor?. [ ] Yes [ ]No
A plan discriminates based on a health factor if it requires an individual to meet a standard related to a health factor in order to obtain a reward. A reward can be in the form of a discount or rebate of a premium or contribution, a waiver of all or part of a cost-sharing mechanism (such as deductibles, copayments, or coinsurance), the absence of a surcharge, or the value of a benefit that would otherwise not be provided under the plan.
Example 1: Plan participants who have a cholesterol level under 200 will receive a premium reduction of 20%. This plan does require individuals to meet a standard related to a health factor in order to obtain a reward.
Example 2: A plan requires all eligible employees to complete a health risk assessment to enroll in the plan. Employee answers are fed into a computer that identifies risk factors and sends educational information to the employee’s home address. This requirement to complete the assessment does not, itself, discriminate based on a health factor.
If you answered “No” to any of the questions above, STOP. The plan does not maintain a program subject to the group health plan wellness program rules.
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D. If the program discriminates based on a health factor, is the program saved by the benign discrimination provisions? [ ] Yes [ ]No
The Department’s regulations permit discrimination in favor of an individual based on a health factor.
Example: Plan grants participants who have diabetes a waiver of annual deductible if they enroll in a disease management program that consists of attending educational classes and following their doctor’s recommendations regarding exercise and medication. This is benign discrimination because the program is offering a reward to individuals based on an adverse health factor.
TIP: The benign discrimination exception is NOT available if the plan asks diabetics to meet a standard related to a health factor (such as maintaining a certain BMI) in order to get a reward.
If you answered “Yes” to the previous question, STOP. There are no violations of the wellness program rules.
If you answered “No” to the previous question, the wellness program must meet the five “paragraph (f)” criteria that will be covered in tomorrow’s Advisor (and we’ll also introduce BLR’s popular wellness guide).